Antioxidant peptides confer numerous health benefits. Unexplored niches provide bioprospection opportunities for potential protease producing microorganisms that are useful in releasing antioxidant peptides from protein sources impacting human health. A cold-adapted bacterium Chryseobacterium polytrichastri ERMR1:04 produced an extracellular protease enzyme optimally at 20 °C, pH 8 with 1.25 g/100 mL skim milk inducer. The purified 22.24 kDa protease was active over a broad temperature 5–65 °C (optimum at 37 °C) and pH 6–10 (optimum at pH 8) range, inhibited by EDTA and 1, 10-phenanthroline, enhanced by Ca2+, Mn2+ and hexane, and retained its activity with surfactants and detergents. ERMR1:04 protease-mediated hydrolysis of soy protein generated antioxidant peptides of <6 kDa, with successful identification, showing radical scavenging activities of 77% DPPH, 96% ABTS, 93% ferrous ion chelation, and Abs700 0.159 for reducing power assay. Such promising properties qualify the ERMR1:04 protease as a potent catalyst for high-value functional food production.